Uprooting the Family

Tue, Dec 11th, 2018

Recruiting top executives has always been a challenge, but more recently with a booming economy, executives are more often than not well positioned in their current firm, so extracting them has become exponentially more difficult. When we overlay a relocation into the mix, it becomes even more difficult when we introduce family considerations, tax differentials when an exec is leaving a low-to-no state income tax state such as Texas, and a house sale that often costing tens of thousands of dollars in brokerage commissions and other costs.

To counter these issues employers are shelling-out generous relocation packages. According to compensation firm Equilar, the average relocation package for the biggest 3,000 publicly traded companies in the US totaled $144,633, and that does not include signing bonuses that are sweeteners to get the executive over the hump. In this environment, public companies are also increasingly faced with investor criticism for these payments. Institutional Shareholder Services (ISS), a proxy adviser, considers them “excessive perquisites’’ without links to performance. That’s all well and good, but what’s the cost to the shareholders if a company cannot attract the best talent because of their inability to address an executives relocation costs and related issues?